Carat won the business following a pitch against four undisclosed agencies.
The review was overseen by Sarah Wood, the Air Miles marketing director.
The company, which is owned by British Airways, has not previously had a retained media agency. Initiative has worked on a project-by-project basis over the past two years.
Air Miles is aiming to reposition itself as an online-based travel company competing against specialist brands such as Expedia and Lastminute. com and established tour operators such as Thomas Cook and Thomson Holidays.
In 2005, the company focused its marketing activity on direct marketing through its retained direct marketing agency, dunnhumby.
It is thought that Air Miles is also on the brink of appointing an advertising agency. It last worked with Big Al's Advertising Emporium.